A marked con­trast in ca­pac­ity

PSG ap­pears poised for deal-mak­ing while HCI has al­ways held sig­nif­i­cant debt and this may limit its op­tions

Financial Mail - - MONEY&INVESTING - Marc Hasen­fuss hasen­fussm@fm.co.za Piet Mou­ton

With the lo­cal eq­uity mar­ket in tur­moil and pro­fes­sional pun­ters start­ing to run scared, one might think a per­fect play is un­fold­ing for op­por­tunis­tic and ad­ven­tur­ous in­vest­ment coun­ters like Hosken Con­sol­i­dated In­vest­ments (HCI) and PSG Group.

HCI and PSG re­cently en­gaged in­vestors, the for­mer at a well-at­tended AGM and the lat­ter dur­ing an in­vest­ment pre­sen­ta­tion cov­er­ing in­terim re­sults.

If ven­dor price ex­pec­ta­tions have been shaken down by the pre­vail­ing mar­ket ruc­tions, nei­ther PSG or HCI are mak­ing a big fuss about new op­por­tu­ni­ties. These days it might be bet­ter not to raise share­holder ex­pec­ta­tions for mov­ing and shak­ing.

Still, the ca­pac­ity for deal­mak­ing in the two en­ti­ties stands in stark con­trast.

PSG, which has long had a per­pet­ual pref­er­ence share struc­ture in place, ap­pears pow­er­fully poised for deal­mak­ing with its gear­ing a mere 13%. In­ter­est cover is a re­as­sur­ing five times.

Per­haps more im­por­tantly, PSG’S brains trust has been able to tap the mar­ket for fresh fund­ing via shares-for-cash is­sues dur­ing those eu­phoric mo­ments that the group’s

Hetty Zant­man

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